How To Pick a Real Estate Niche
Real Estate Specialities for REALTORs
Choosing a real estate niche can be one of the best things for your real estate business. But, how do you go about selecting a real estate niche or speciality? There are many options to choose from like geo-farming, demographic farming, property type specialties, and transaction type specialties like foreclosures or short sales. Choose the best real estate niche involves looking at the different types of specialities, analyzing the commercial intent, gauging your interest, committing, and moving forward without fear.
In this real estate agent podcast, you will learn how to choose the best real estate niche.
[00:00:00] Hello and welcome to Rev Real Estate School. The podcast with quick tips and actionable advice to help you sell more real in today's world. And now your host Michael Montgomery.
[00:00:11] Hello and welcome back to Rev Real Estate School. I'm your host Michael Montgomery and today we are talking about how you can pick a profitable real estate niche.
[00:00:23] Now if you look at the agents that are currently in your market I want you to picture some of the more successful agents in your market and ask yourself do these agents have a niche whether that be a certain type of person that they work with a certain property type or more commonly an area. Do they farm an area? Chances are they probably do. I find most successful real estate agents have some sort of niche or area that they farm. So if you don't have a specialty or an area that you farm today you're going to learn the five quick tips that you can put into action right away to choose a profitable niche.
[00:01:08] Now if you're listening to me and you're saying what the heck is a niche if you're in the U.S. you've probably heard a pronounced "niche" and this is basically just a specialty or a certain area or type of the market that you service and that you service more so than other areas. Now oftentimes if you're a newer real estate agent you might be thinking well I don't want to neglect other areas I don't want to focus on one community therefore neglecting other areas and this could actually not be further from the truth. It seems like this oftentimes we do think that by focusing on one area where naturally going to lose business because we're not getting business from other areas but in fact you will notice the complete opposite. I can almost guarantee you that when you really start focusing on your niche whether that be and we're going to get into a few examples of what you can have as a niche but whether that be an area a property type or a demographic your income will actually go up. And the reason is people want a specialist. People don't want the person that is a one size fits all. They want a specialist. They want somebody who has specialized skill. And also your more memorable with a niche. If you service say downsizers and at a party you're having a conversation with somebody who is a move up buyer chances are they will actually remember you a lot more because you have that specialty with downsizes. And next time that they hear of somebody who's planning on downsizing your name will come to mind and that is because you have became memorable.
[00:02:53] Let's jump in to the five steps that you can use in order to find a profitable real estate niche. Number one analyze your options. You have to pick niche that will work for you. And let's just go over a few examples that can work. So geo farming is the main one. And a lot of people do this and for good reason because it can be very profitable. Now we have a podcast coming up completely on Geo farming so I won't get into too much detail about how this will work but geo farming can be an amazing way to have a niche. Other opportunities can be a property type so a condo, lofts, multi-family, lots, or bare land, new construction, gated communities or you can focus more on a client type so luxury buyers and sellers, downsizes, first time homebuyers, or you can focus on something that's a little bit more specialty say like dog friendly. Those that have dogs are very focused on condo buildings that allow pets or fenced backyards or potentially investors. So these are just a few options as a number of different options out there. There's no right or wrong don't put a ton of pressure on yourself for picking the exact right one because it does take some analysis and that brings us in to step number two.
[00:04:17] Step number two is analyze the commercial intent. What do I mean by this? When I first got into focusing on a niche I thought investors would be a perfect fit and they can be a great fit. They weren't a great fit for me but they can be a great fit for a real estate agent. I'll tell you why they weren't a great fit for me because they did need quite a bit of time. They wanted to see a lot of places they wanted a lot of analysis prior to actually making a decision which then took away some of my time as a solo agent from other clients. So I ended up starting out focusing a lot of time on investors but then I started to draw back and got more in to geo farming. So that was just me. But you want to look at the commercial intent of your time and how much that can be worth in dealing with that client. Another example is you probably wouldn't focus on say university students because their commercial intent is very low. Not a lot of university students purchase homes. So if your focus was just university students chances are you might have trouble selling a lot of homes to that group. The next part of analyzing the commercial intent is to look at sales price and turnover rates. So if you're in a geo-farm if you're in an area that you're farming then your average sale price should be pretty easy to find out and your turnover rate should be pretty easy to find out too. Your turnover rate is basically just the ratio of homes that are selling versus homes that are in the market or that are in the current area and what you're looking for is something north of about 6 percent if possible. Now it doesn't always work that way and if you're in a luxury community it might be lower than this but your sales price will be higher. So there still can be great commercial intent there but if you're looking at an area where the sales price is a little bit lower than you probably want a higher turnover rate because you want to increase that commercial intent. So that's commercial intent.
[00:06:21] Number three is you want to analyze your interest so don't worry if you want to farm an area and you don't live there. I get that question all the time is can I farm a community where I don't live in the. That is absolutely all you have to have is an interest in the area. Now it does help if you live there or if you want to focus on say luxury home buyers or sellers. Do I need to own a luxury house and the answer is no you definitely do not. Now if you do own that luxury house or if you work in that crowd already you can have a little bit of a leg up but that's not necessary. You just have to have the interest. So you want to analyze your interests and if you're not interested in say building homes then lots and land and maybe even new construction won't necessarily be for you. If you're really interested in say you like walkability or very cool homes then maybe lofts or condos could work very well for you. So that's number three analyze interest next.
[00:07:23] Next, you want to analyze your commitment. So this one's very important. The thing about specializing in finding a niche or a geo farm is it will not pay off for some time depending on the niche and depending on the specialization it can be upwards of two years. What I recommend is when you are selecting a niche or a geo farm. Be prepared for one year of work without any income from that. So you have to be prepared and go into it with that mindset. When I first started farming I started to farm just a couple areas. I just because we lived in the area I started to just farm that area and I sent out some postcards once or twice and said oh farming doesn't work well we all know that that's not going to work. So you have to be able to commit at least one year if you're only going to put in six months and try this for six months. Chances are you're also going to think it doesn't work as well.
[00:08:20] Number five analyze your fear. So what do I mean by this one? A lot of times people want to get into certain types of niches or different types of communities or say luxury buyers and sellers but they're scared because they potentially don't think they have the experience. What I would say to this is really look at the fact that is this something that you're scared of or is this something that can just be learned. Can you learn the market so well you might not have ever sold a luxury home but you can still learn the luxury market inside and out you can learn what that demographic will be looking for in homes and what interests them. So you can still really become the professional regardless of if you've sold this type of property before. So analyze your fear and let go of some of your fear associated with this because it will be a learning experience.
[00:09:13] So those are your five tips analyzed your options analyze the commercial intent analyze your interest analyze your commitment and analyze your fear. Thank you very much for listening to this episode this one went a little bit longer but it's a very important topic and it's something that everybody should be focused on as a real estate agent and should be looking into how they can build a niche.
[00:09:37] Thanks again for listening this episode. Remember you can ask a top producer anything you'd like. All you have to do is rate review the show head over the free coaching section on our Web site and a top producer will give you a call. Thanks again and we'll see you in the next lesson.
[00:09:51] This episode of Rev Real Estate School has come to a close. Thank you for tuning in. We'll see you back here for the next lesson.